Mumbai's real estate market is facing a severe affordability crisis, making homeownership nearly impossible for young professionals, even those with substantial incomes. This warning comes from leading real estate developer Abhinandan Lodha, founder and chairman of The House of Abhinandan Lodha.
Speaking at News18's Rising Bharat Summit in Mumbai, Lodha highlighted that escalating land prices, construction costs, and government levies have pushed property values beyond the reach of many potential young buyers. This issue is particularly acute for those who wish to live closer to their workplaces in central Mumbai, avoiding lengthy commutes from distant suburbs.
The Affordability Gap: Not Just "Affordable Housing"
Lodha drew a crucial distinction between "affordable housing" and general "affordability." While affordable housing typically refers to properties priced below Rs 50-60 lakh (approximately $60,000-$72,000 USD), the broader challenge lies in making homes accessible to well-earning individuals who aspire to live within Mumbai's main city limits.
"People who are earning well want to live closer to the city. They don't want to travel from Nayagaon or Vasai to come to work to Mumbai; the cost of land in the city and the cost of taxes, etc have gone so high that it is simply impossible for youngsters now to be able to buy houses," Lodha stated.
He noted that while demand for homes in the sub-Rs 60 lakh category remains robust, supplying them at these price points requires significant government support due to high input costs.
Technology Offers Some Solutions, But Core Issues Remain
Lodha illustrated how technology and innovative sales strategies can reduce costs, citing a project in Nayagaon where his company successfully cut overall project costs by 22% and sold 1,500 apartments online in a single day, all priced under Rs 50 lakh. However, he emphasized that such solutions are more effective for projects on the city's outskirts.
For housing within Mumbai itself, the fundamental hurdles of exorbitant land costs and government-imposed charges persist, making genuine affordability a much tougher challenge.
Call for Government Intervention
Lodha urged for comprehensive government intervention to address the crisis. He suggested incentives, lower tax rates, and reduced premiums as potential solutions. "Construction cost is going to keep rising; there's no way you can counter that," he remarked, implying that cost reductions must come from other areas.
He also cautioned against relying solely on increasing the Floor Space Index (FSI), which dictates permissible construction on a plot. While higher FSI allows more units, it also necessitates more infrastructure development, driving up overall costs. "Unless the government steps in in a big way, either makes more land available at lower prices... otherwise affordability will continue to suffer," Lodha concluded.
Real Estate Veteran Echoes Concerns
Niranjan Hiranandani, another prominent real estate veteran on the panel, reinforced Lodha's concerns, stating, "Affordable housing is destroyed. It doesn't exist." Hiranandani pointed out that government charges alone can account for a substantial portion of a property's selling price, exacerbating the crisis. "For instance, when I sell a house for 40,000 rupees a square foot in Mumbai, 20,000 goes to government first," he claimed.